Nebraska Adopts Sales Tax Exemption to Clear the Path for Renewable Energy Development

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On June 4, 2013, Nebraska Governor Dave Heineman signed into law a bill (LB104) designed to incentivize the development of renewable energy in the state by exempting certain purchases of renewable energy equipment and other project costs from the state’s 5.5 percent sales tax. The bill defines sources of renewable energy to include wind, solar, geothermal, hydroelectric and transmutation of elements. Under the new law, prospective renewable energy developers will be required to invest a minimum of $20 million in qualified property in the state to be eligible for the exemption. Separate proposals to limit the benefit of the exemption to those spending a percentage of project costs using Nebraska-made materials, and to those spending a percentage of gross revenues earned with Nebraska businesses or individuals, both fell flat and are not included in the final law. The bill falls under the Nebraska Advantage Act of 2006 and takes effect immediately. The complete text of the new law can be found here.

Nebraska wind continues to be a largely untapped resource. According to the Department of Energy, Nebraska has the fourth-best wind energy resource in the country with more than 900,000 MW of wind energy potential – more than 120 times the amount of power needed to meet the state’s needs. However, Nebraska is currently ranked 26th in wind energy production, with 459 MW of installed capacity– far less than neighboring Iowa with 5,137 MW. Neighboring states such as Iowa, Kansas and Oklahoma have similar sales tax exemptions for purchases made in connection with the development of renewable energy. The new law comes at a time when TradeWind Energy of Lenexa, Kansas, is considering the investment of $300 million to 400 million to develop the 200 MW Rattlesnake Creek wind project in Dixon County in northeastern Nebraska. Nebraska is a public power state, and producers of electricity are required to offer at least 10 percent of the generation from a project to Nebraska utilities.

Topics:  New Legislation, Renewable Energy, Sales & Use Tax, Tax Exemptions

Published In: General Business Updates, Energy & Utilities Updates, Environmental Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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